01—Abstract
Summary
Summary of the 10-K filed May 23, 2011. Cited figures are marked; the original filing is the authoritative source.
Flextronics International Ltd. (FLEX) reported significant revenue growth in fiscal year 2011, reaching $28.7 billiona, a 19% increase from the previous year.
This growth was driven by an improved macroeconomic environment and increased demand for customers' end products across all major markets, supported by new customer and program wins. The company also saw an improvement in gross margin to 5.5% from 5.0%, attributed to increased sales volume, better capacity utilization, and cost efficiencies from prior restructuring activities. Net income rebounded significantly to $596.2 millionb, a substantial increase from $18.6 million in fiscal year 2010, leading to diluted earnings per share of $0.75.
Despite the positive financial performance, FLEX faces ongoing competition and industry-specific risks, including short product life cycles and potential component shortages, though the latter showed signs of abating. The company's strategy focuses on talent, customer-centricity, market focus in high-growth sectors, and leveraging its global operations capabilities and vertically-integrated service offerings.
Key customer relationships, particularly with Research In Motion, remain crucial, though the company is diversified across multiple markets and geographies. FLEX actively managed its debt, redeeming several subordinated notes, and continued its share repurchase program.
02—Key points
Key Highlights
- Net sales increased by 19% to $28.7 billion in fiscal year 2011.
- Gross margin improved to 5.5% from 5.0% in the prior fiscal year.
- Net income surged to $596.2 million, a significant improvement from $18.6 million in fiscal year 2010.
- Diluted earnings per share rose to $0.75 from $0.02 in the prior year.
- The company generated $857.3 million in cash from operating activities.
- FLEX completed significant debt redemptions during the fiscal year.
- Despite growth, the company continues to navigate risks related to competition, product life cycles, and potential supply chain disruptions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Flex Ltd. kept $0.02.
- Revenue$28.44B100.0%
- Cost of revenue−$26.86B94.4%
- Gross profit$1.58B5.6%
- Operating costs−$971.1M3.4%
- Operating income$612.3M2.2%
- Interest, other & tax−$16.0M0.1%
- Net income$596.2M2.1%
Where FY2011 revenue went
$28.44B- Cost of revenue: $26.86B, 94% of revenue
- Net income: $596.2M, 2.1% of revenue
- R&D: $46.5M, 0.2% of revenue
- SG&A: $801.8M, 2.8% of revenue
Kept 2.1% as net incomeNet income $596.2M · 2.1%R&D $46.5M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed May 23, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $28.44B$24.11B | +18.0% |
| Cost of Revenue | $26.86B$22.80B | +17.8% |
| Gross Profit | $1.58B$1.21B | +30.7% |
| R&D Expenses | $46.50M$13.30M | +249.6% |
| SG&A Expenses | $801.77M$755.06M | +6.2% |
| Operating Income | $612.26M$25.00M | +2348.8% |
| Interest Expense | $88.70M$158.10M | −43.9% |
| Net Income | $596.22M$18.59M | +3106.5% |
| EPS (Basic) | $0.77$0.02 | +3750.0% |
| EPS (Diluted) | $0.75$0.02 | +3650.0% |
| Shares Outstanding (Basic) | 777.32M811.68M | −4.2% |
| Shares Outstanding (Diluted) | 790.19M821.11M | −3.8% |
05—Questions
Frequently Asked Questions
What was Flextronics's financial performance in fiscal year 2011?
Flextronics reported a strong recovery in fiscal year 2011, with net sales reaching $28.7 billion, up 19% from the prior year. Gross profit increased, and net income rose substantially to $596.2 million, resulting in diluted earnings per share of $0.75. This improvement was driven by increased customer demand and better operational efficiency.
What are the key markets that Flextronics serves?
Flextronics serves a diversified range of markets, including Infrastructure, Mobile communication devices, Computing, Consumer digital devices, Industrial (including semiconductor capital equipment, clean technology, aerospace and defense, and white goods), Automotive and Marine, and Medical devices.
What are the main risks identified by Flextronics in its filing?
Key risks include dependence on industries with short product life cycles, potential customer order cancellations or changes, intense competition, reliance on a few major customers, potential component shortages, intellectual property risks, international operational risks (currency fluctuations, political instability), and environmental regulations. The company also highlighted risks associated with its components business and design services due to substantial investments and ramp-up costs.
How did Flextronics manage its debt and capital during fiscal year 2011?
Flextronics actively managed its debt by redeeming several subordinated notes and reducing borrowings. The company also continued its share repurchase program, buying back approximately 65.4 million shares. It also secured new term loan agreements in Asia to support its growth.
06—Continue